Replies to post #5441 on Coda Octopus Group Inc (CODA)

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The Company entered the CRADA in July 2018 and under its terms, the Company is required to fund and deliver the GEN 1 HUD within 12 months of the Agreement. Following completion of live trials with NASA in June 2019 of the first pre-production prototype, we are now locking down the design to reflect the findings of the NASA Trial and deliver the GEN 1 product to NAVSEA once fully signed off by NSWC.

We anticipate that a small number of GEN 1 HUD units will be purchased across various Navy divisions and by NASA in 2019 for continued assessment. In the same time frame, we also expect to receive R&D funding from the Navy to commence the second generation (GEN 2) development between October and November 2019.

We anticipate that the GEN 1 HUD will be operational in early 2020. We expect to manufacture the HUD on the basis of a license agreed between NSWC PCD and the Company for the manufacture and distribution of the HUD system for the NAVSEA and for foreign naval forces, subject to the approval of the US Navy. We also expect that the HUD system and Coda Octopus Echoscope® will be applied to the Approved Navy Use (ANU) List allowing the Navy to acquire these items.

We have budgeted a total of $500,000 for the development of the first prototype HUD. During the Current Quarter and for the Current Nine Month Period, we expended 95,159 and $284,494, respectively. We have entered into commitments for the purchase of components for a number of units which we will use to manufacture R&D Prototypes for continued evaluation. We expect therefore that we will expend the full $500,000 by the end of the current fiscal year.

As we accelerate the development of the first-generation of the HUD for delivery to NAVSEA and completing our fourth and fifth generations sonar products, we anticipate R&D expenditures to increase in the fourth quarter.